In re McCune, No. 20-12326-j7 (Bankr. D.N.M. Apr. 5, 2024)
Legal information, not legal advice. Verify against the cited opinion.
- Citation: In re McCune, No. 20-12326-j7, Memorandum Opinion (Doc. 332) (Bankr. D.N.M. Apr. 5, 2024)
- Court / Year: United States Bankruptcy Court, District of New Mexico, 2024
- Topic tags: equitable_interest · bankruptcy · remedies
- Facts: Chapter 7 debtors (the McCunes) bought their residence under a New Mexico real estate contract (REC). After conversion to Chapter 7, the seller’s personal representative moved for a determination that the REC had been rejected by operation of § 365(d)(1) (no assumption within 60 days) and that the residence was therefore not property of the estate.
- Holding: The REC remained in effect and property of the estate; neither its rejection nor any other mechanism extinguished the debtors’ equitable interest. The court declined to decide whether the REC is an executory contract under § 365 or a security device, because the result was the same either way.
- Reasoning: “Under New Mexico law, the buyer of real property under a real estate contract acquires an equitable interest in the property and is treated as the owner of the property with equitable title while the real estate contract is in place, while the seller maintains bare legal title” (quoting State v. Earp, 2014-NMCA-059, 326 P.3d 491). The court canvassed the circuit split: Shaw v. Dawson (In re Shaw), 48 B.R. 857 (D.N.M. 1985), treats an REC as executory under § 365; an opposing line holds “Contracts for Deeds are merely a financing arrangement for a sale which has already occurred. The vendor retains legal title only as security for the price.” Because the buyer held equitable title and the REC had not terminated, the property stayed in the estate regardless.
- Practical impact for CFD operators/buyers: Confirms (1) the New Mexico equitable-title characterization (buyer = owner; seller = bare legal title) and (2) that a defaulting/bankrupt REC buyer’s interest is not wiped out merely by § 365 rejection — a meaningful buyer protection in bankruptcy. Documents the unresolved executory-vs-security split in the District of New Mexico.
- Good-law status: Good law (recent bankruptcy-court opinion).
- Source (retrieved): https://www.nmb.uscourts.gov/sites/default/files/opinions/McCune-Memorandum-Opinion-Doc-332.pdf · Verified: 2026-06-08
Jurisdictions that follow / cite: new-mexico
Disclaimer. Legal information, not legal advice. Confirm the opinion is still good law before relying on it.